World Bank predicts 5 percent economic expansion for Armenia in 2014

YEREVAN, April 9, / ARKA /. The World Bank predicts a 5% economic growth for Armenia in 2014, according to its report "Armenia, Looking for More Dynamism." The report says also that Armenia’s GDP may increase to 5.5 % in 2014-2017.

The report explains this growth rate by a steady level of private savings and investment, as well as by a gradual increase in the proportion of economically active population and production growth trends.

The report says that the gradual recovery of the global economy will contribute to real GDP growth in Armenia in the medium term.

Industry and services are said to be the main growth engines and their contribution to GDP will increase from 50% to 60 %.

At the same time, the World Bank forecast a 5-6 percent growth of agriculture, which is the average annual growth in the last 10 years According to World Bank experts, construction sector is still risky because it experiences a decline every second year after the crisis.

Despite the 5 percent GDP growth forecast in the medium term, there are some risks in 2014 related to the weakening of the Russian economy, according to the report.

It says the ongoing crisis in Ukraine and the depreciation of the Russian ruble could have negative consequences for Armenia’s economy - from the decline in export demand to the impact of a weak ruble on remittances by Armenian labor migrants in Russia.

The report says also the inflation rate in Armenia in 2014 will be 2.3% and 4% in 2015.

The report says also that due to low prices at the international consumer markets, as well as a stable price level for gas thanks to an agreement signed with Russia, inflationary pressures in Armenia will weaken.

According to Armenia’s 2014 budget, the GDP is expected to grow by 5.2 % and the inflation is forecast at 4 % (± 1.5%). -0-